The new requirements have been introduced to improve transparency and clarity regarding the auditor’s responsibilities when performing an audit, and regarding the information that auditors provide to users about the audit.
For audits undertaken in accordance with International Standards on Auditing (ISAs), the new standard takes effect for annual periods ending in December 2016, although auditors can choose to apply it earlier. In Australia, the Auditing and Assurance Standards Board (AUASB), which has been involved in the IAASB project, will produce an equivalent standard for Australian companies.
Duncan McLennan, KPMG Australia Head of Audit, said: “For listed companies, the new requirements will, when they take effect, represent an important change in auditor reporting and introduce a level of transparency that can enable users to better recognize the value of an audit.”
The most salient amendment introduced is the requirement for auditors of listed companies to include in their auditor’s report descriptions of key audit matters, which are selected from matters discussed with company directors. The descriptions will outline why the auditor judged the matter to be one of most significance to the audit and how they addressed it.
Duncan McLennan commented: “The introduction of these descriptions is a significant change in auditor reporting. They provide the means for the auditor to address user demand for more information on the audit.”
For all companies, the revised auditor’s report will include a statement outlining the auditor’s responsibilities for ‘other information’ and their findings, as well as revised descriptions of the auditor’s responsibilities and those of company management.
